CORNELL ECON 4040 - Hadley (2 pages)

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lecture 17

Lecture number:
Lecture Note
Cornell University
Econ 4040 - Economics and the Law
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Econ 4040 1st Edition Lecture 17 Outline of Last Lecture I Transatlantic II Shirley Maclaine Outline of Current Lecture III Hadley IV Walgreen Hadley Brief Fact Summary Plaintiffs operated a mill and a component of their steam engine broke causing them to shut down the mill Plaintiffs then contracted with Defendants common carriers to take the component to W Joyce Co to have a new part created When delivery was delayed due to Defendants neglect causing Plaintiffs mill to remain closed longer than expected Plaintiffs sued to recover damages Synopsis of Rule of Law The damages to which a nonbreaching party is entitled are those arising naturally from the breach itself or those that are in the reasonable contemplation of the parties at the time of contracting Facts Plaintiffs operated a mill which they were forced to shut down when the crank shaft of their steam engine broke They contacted the manufacturer of the engine W Joyce Co Joyce and Joyce agreed to make a new shaft from the pattern of the old one Therefore a servant of Plaintiffs went to the office of Defendants common carriers to have the crank shaft taken to Joyce Plaintiffs servant told Defendants clerk that the mill was shut down and the shaft must be sent immediately The clerk informed Plaintiffs servant that if the shaft were given to them by twelve o clock any day it would be delivered by the next day Plaintiffs took the shaft to Defendants the next day before noon Due to Defendants neglect the delivery to Joyce was delayed and Plaintiffs did not receive the new shaft for several days after they should have received it Issue Are Defendants liable to Plaintiffs for damages suffered by Plaintiffs due to lost profits Held No A nonbreaching party is entitled damages arising naturally from the breach itself or those that are in the reasonable contemplation of the parties at the time of contracting Here while the breach by Defendants was the actual cause of the lost profits of Plaintiffs it cannot be said that under ordinary These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute circumstances such loss arises naturally from this type of breach There is a multitude of reasons for a miller to send a crank shaft to a third party Defendants had no way of knowing that their breach would cause a longer shutdown of the mill resulting in lost profits Further Plaintiffs never communicated the special circumstances to Defendants nor did Defendants know of the special circumstances Discussion Damages are limited to those that arise naturally from a breach and those that are reasonably contemplated by the parties at the time of contracting Walgreen Brief Fact Summary Defendant Sara Creek Property Company is appealing a judgment for a permanent injunction in favor of Plaintiff Walgreen Company Synopsis of Rule of Law An appellate court will not overturn a final judgment of a permanent injunction granted by a trial court if the trial court used reasonable judgment in weighing the costs between a damages remedy and an injunction Facts Plaintiff had a thirty year lease with Defendant landlord that expired in 2001 The lease contained an exclusivity clause to prevent Defendant from leasing any part of the mall containing Plaintiff s store to another pharmacy Defendant wanted to buy out an anchor tenant and build a store with a pharmacy Plaintiff sued for the breach of contract and the district court awarded a permanent injunction to prevent Defendant to placing a pharmacy inside the mall per the lease agreement Defendant argues that Plaintiff did not prove that remedy damages were inadequate Issue The issue is whether the District Court exceeded the bounds of reasonable judgment in granting a permanent injunction rather than a remedy of damages Held The Court of Appeals for the Seventh Circuit held that they would not rebalance the factors to determine which remedy was more satisfactory instead they would review the district court s judgment that they used to come to their conclusion and ensure that the judgment was reasonable In this case the district court made a reasonable determination that a damages remedy for the remainder of the lease would be highly speculative and costly to determine and if the costs to Plaintiff were higher than Defendant s costs as the result of the injunction then the market would naturally resolve the problem Discussion The appellate court will not reexamine a final judgment to determine if they would come to the same conclusion The appellate court will only determine if the trial court exceeded their boundaries in their decision

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